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MDM Classics: The Six Reasons for Strategy Failure

MDM Classics: The Six Reasons for Strategy Failure

January 23, 2019

The pace of change in the distribution industry over the last three decades has increased dramatically, creating even more need to approach it critically.

“The true fact is that there’s almost nothing new. Most change is actually incremental; it’s how fast you adapt an idea or concept to your business and then passionately implement it,” says Steve Samek, author of the first study that led to NAW’s recurring Facing the Forces of Change series while he was with accounting firm Arthur Andersen. Previous generations wanted things to be completely right before rollout. But now, that’s simply too long. “Now you get it close and you perfect it,” he says.

In The Folly of Fast Following, from May 2017, MDM spoke with Samek about what has changed around innovation for the distribution industry since that first study in 1983.

Samek outlined six reasons that companies fail in their implementation of new strategies.

1. Failure to recognize change fast enough – and the opportunity gets missed

In 1975, Samek had a discussion with the owner of a storage facility where he had a unit. The owner had an Altair 8800 computer and was using it to bill customers and post receivables. “I was so intrigued,” Samek says. “He explained what he was doing, and I thought, ‘This is stupid. It takes 10 times as long as it would for me to do it manually.’ I failed to recognize the downstream geometric power of change facilitated by technology.

“That was my first mistake in recognizing technology change and its profound impact,” he says.

Just because you can’t fully appreciate the potential of something at the point of conception doesn’t mean the opportunity for success (or failure) doesn’t exist. Companies that recognized that e-commerce would surpass other order-entry methods were much better positioned for today’s market than those that thought it would be just another passing fad. Don’t dismiss an idea out of hand simply because it hasn’t been tried before.

2. Lack of speed to market

Even if a needed change is recognized, failure to act with the appropriate speed will leave companies behind. It can’t be a competitive advantage for you if you’re following behind everyone else. While fast following used to be a good, safe strategy, even that needs to be done more rapidly now or your competitors will be three or four ideas ahead of you before you even start.

Previously, businesses could plan out a cycle over an extended period of time that allowed for planning and several rounds of prototyping and testing before rolling out a new product, concept or service. But now, that timeline has been compressed.

“If you’re not on a pace to make significant changes in a year or less, you’re going to be left at the gate,” Samek says. You have to be willing to rapidly execute on your strategy.

3. Focus on urgency, not importance

President Dwight Eisenhower noted that the things that are urgent always tend to trump the things that are important. While urgent matters demand immediate attention, don’t let that distract you from planning for the important ones – or you will get stuck in a reactive cycle. To truly be innovative, you have to be willing to look forward instead of at what’s right in front of you and budget the resources to address the important.

4. Underestimating the time required

“Everything that’s hard, new or different takes at least twice as long to implement as you think it will,” a phenomenon identified by psychologist Daniel Kahneman, known as the ’planner’s fantasy,’” Samek says. And when something takes longer than expected, many people get frustrated and give up before finishing. “I think many companies have a severe case of planner’s fantasy,” he says.

Be realistic in estimating how long it will take to implement a new strategy – and then add time to that expectation for unexpected hurdles. But don’t give yourself unlimited time, either, or your strategy will fall victim to lack of speed to market as your competitors pass you.

5. Measuring the wrong things in the wrong way

Distributors like quantifiable measures to evaluate success. Often this is measured in revenue increases or cost reductions. It’s easy to measure these things and have a general sense as to what caused the change.

“I love the concept of ‘Keep it simple, stupid,’ ” Samek says. “But it should be ‘Keep it simple, but don’t keep it simple-minded.’ ”

Distributors are heavily focused on measuring the outcome – which is important – but often fail to look at the impact on process. “They don’t hold ‘How many people did I get on the internet to buy this month?’ in as high regard as ‘Did my sales go up?’ ” Without measuring the process, you can’t really assess how effective your strategy is likely to be or how it can continue to be improved.

6. Operating in silos

“Nothing happens in isolation,” Samek says. If you’re trying to implement a company-wide strategy without bringing together cross-disciplined teams, you could be creating your own roadblock. Success requires recognition of how any change will affect the cross-functional teams within your organization.

For example, if you’re focused on increasing e-commerce traffic to your website but you’re not considering the impact increased online sales will have on your delivery network, you could end up failing to deliver on your service standards.

“You have to find a way to get them together and intellectually connected if you want to see innovative thinking,” Samek says.

Premium subscribers can read more from MDM’s interview with Samek in The Folly of Fast Following. Not a subscriber? Learn more about the benefits of MDM Premium.

 

© 2019 Gale Media, Inc.

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